SpaceX Links Elon Musk's Compensation to Achievement of Mars Colonization Objective

SpaceX Board Approves Elaborate Compensation Plan for Elon Musk

The board of SpaceX has approved a compensation plan for its founder, Elon Musk, that is as ambitious as the company's goals of colonizing Mars and establishing data centers in outer space. The details of the plan, which have not been widely reported, were revealed in the company's confidential registration statement filed with the Securities and Exchange Commission and reviewed by Reuters.

According to excerpts from the registration statement, the plan awards 200 million in super-voting restricted shares to Musk if the company reaches a market value of $7.5 trillion and establishes a permanent human colony on Mars with at least 1 million people. Additionally, Musk will receive as many as 60.4 million in restricted shares if SpaceX meets separate valuation goals and operates data centers in space that provide at least 100 terawatts of compute capacity.

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The awards come with super-voting Class B restricted stock, which carries 10 votes to every 1 Class A share, and vest in tranches as the company's value rises. However, Musk will not receive a single share if the company fails to reach the board's lofty valuation targets, which are not tied to a specific timeline other than his continued employment.

Musk has received a nominal salary from SpaceX of $54,080 per year since 2019. The value of the pay package could not be determined since SpaceX is privately held. The company is targeting an initial public offering around the time of Musk's birthday on June 28, which could value the company at some $1.75 trillion, Reuters has reported.

As of December 31, Musk held 68.8 million in previously awarded Class B stock options with a strike price of about $42 that expire in 2031, allowing Musk to pocket any profit above that amount if he exercises the options before that date.

Musk is already worth $776 billion by Forbes' estimate. He could more than double that if he achieves separate, ambitious performance goals at Tesla, the EV automaker he also runs. He owned about 20% of that company's stock as of November, according to the registration statement.

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Executive compensation experts say that the compensation package is unprecedented in the industry. "I'm not a physicist or astronomer and I wouldn't know where to start," said Eric Hoffmann, chief data officer for corporate governance consulting firm Farient Advisors. "The measuring stick is, has it been done in human history? These haven't. So that's hard."

The goals of colonizing Mars and building space data centers stand out because they are not standard financial metrics used to set CEO pay. Equilar Director of Research Courtney Yu said that it is up to the boards of the respective companies, SpaceX and Tesla, to determine how best to structure Musk's time.